Mastro Auctions, now known as Ketap Company, drops lawsuit and settles with Dave Forman

When Mastro Auctions went out of business two years ago in the midst of an FBI investigation into allegations of fraud, company executives claimed they were unable to pay consignors because some bidders had not paid their bills.

The company filed a lawsuit in 2009 in Illinois state court against Dave Forman, the president of SportsCard Guaranty, a card-grading service, claiming Forman stiffed Mastro Auctions for $400,000 for items purchased in 2007 and 2008.

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"If Dave Forman paid Mastro Auctions, then we could take care of all those consignors and have money left over," Doug Allen, the former Mastro president who has started a new firm, Legendary Auctions, said at the time.

Forman filed a counterclaim that alleged Mastro Auctions and its executives engaged in shill bidding and other kinds of fraud. After two years of litigation, the two sides agreed to a settlement. Mastro Auctions, now known as Ketap Company, agreed to abandon its $400,000 claim, and company founder Bill Mastro agreed to pay Forman $3,600.

"It is the most devastating and complete win that one can have in a civil case," Forman's attorney Jeff Lichtman said.

Lichtman said Mastro Auctions wasn't really interested in pursuing its lawsuit; the company, once sports memorabilia's biggest and most influential auction house, was simply trying to divert blame for not paying its consignors, the attorney said. When Forman filed his own counterclaim, former Mastro officials realized they would be deposed under oath and eventually agreed to what Lichtman describes as a lopsided settlement.

"Like any other bully, when you punch back, they folded, and they folded in the most cowardly manner," Lichtman said.

Bill Mastro, the auction's house's founder and former chairman, hung up when contacted for comment. Allen said the settlement represented a victory for him and Legendary because they were released from Forman's counterclaim. "We didn't have to pay anything to get it dropped," Allen said.

Mastro Auctions has been at the center of an investigation into shill bidding, card doctoring and other fraudulent activities that is being conducted by the Chicago office of the FBI. The investigation has dragged on for almost four years.